Corporate Research briefing paper
Gross Value Added
Gross Value Added
In its simplest form, gross value added (GVA) is a key measure of the value of goods and
services that an area produces. It measures the contribution to the economy of each
individual producer, industry or sector. GVA, and particularly GVA growth, is an important
indicator of the overall health of a local economy and is used to monitor the
competitiveness and productivity of the economy. It is calculated by summing the
incomes generated in the production process.
Summary
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In 2008, Blackburn with Darwen generated £2.2bn to gross value added. A 3%
increase on 2007 levels.
Growth rates year on year are below national and regional levels.
The average annual GVA growth rate between 1995 and 2008 is 3.3% for
Blackburn with Darwen compared to 4.5% for the North West and 5.4%
nationally.
In 1995 44.8% of Blackburn with Darwen’s wealth was generated by the
production sector, 18% from distribution, transport and communication and
11.8% from business services and finance. Public administration generated 20%.
Overall in 1995, Production contribution to GVA was the largest, with the
service sector some way behind. This however changes markedly by 2008.
By 2008 production’s contribution to GVA has decreased while that for Public
administration, education, health, Distribution, transport & communication and
Business services and finance have all increased.
GVA per head is lowest for Blackburn with Darwen (£15,824/per head) and is
lower than the regional (£17,604) and national average (£21,103).
Since 1995 Blackburn with Darwen GVA per head has increased 43.4% from
£11.034 in 1995 to £15,824 in 2008 compared to 52% for the North West and 58%
nationally.
Average growth rates (1996 to 2008) for GVA per head is lower for Blackburn
with Darwen compared to local, regional and national levels.
The average growth rate of 3.5% for Blackburn with Darwen for the last 10 years
however is lower than the national (4.7%) and regional average (4.3%).
In 2008, Blackburn with Darwen produced £2.2bn. This constitutes 1.8% of the total North
West GVA and 9.4% of the total Lancashire GVA
Table 1: Gross Value Added In Blackburn with Darwen
Total
Annual
GVA (£)
growth rate
2007 to 2008
Blackburn with Darwen
2,207m
3.0%
Lancashire County Council*
19,428m
2.2%
Lancashire
23,368m
2.2%
North West
121,015m
2.8%
United Kingdom
1,295,663
3.5%
Average annual
GVA growth rate
1995-2008
3.3%
4.3%
4.1%
4.5%
5.4%
Source: Local GVA, 2008
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Growth rates year on year for Blackburn with Darwen have been consistently lower
than the regional and UK average.
Most recent figures show the growth rate for 2008 to be 3.0%, lower than the
national average of 3.5% but higher than the North West rate of 2.8% and the 2.2%
rates for Lancashire and Lancashire County Council (12 district).
Figure 1 GVA Growth rates (year-on-year) 1995-2008
8.0%
7.0%
UNITED KINGDOM
North West
6.0%
6.0%
GVA growth rate (%)
GVA growth rate (%)
7.0%
5.0%
4.0%
3.0%
2.0%
1.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
1
1
1
996
997
998
1
2
999 000
2
2
2
2
001
002
003
004
2
2
005 006
2
2
007
008
0.0%
1 996 1 997 1 998 1 999 2 000 2 001 2 002 2 003 2 004 2 005 2 006 2 007 2 008
7.0%
7.0%
Blackburn with Darwen
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
1 996 1 997 1 998 1 999 2 000 2 001 2 002 2 003 2 004 2 005 2 006 2 007 2 008
GVA growth rate (%)
GVA growth rate (%)
6.0%
Lancashire
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
1 996 1 997 1 998 1 999 2 000 2 001 2 002 2 003 2 004 2 005 2 006 2 007 2 008
Over the 10 years between 1998 and 2008, average annual growth rates for Blackburn
with Darwen was 3.3%, Blackpool 2.6%, and Lancashire County Council 4.3%, all are much
lower compared to the UK average of 5.4%.
Blackburn with Darwen and Blackpool both have lower growth rates than the Lancashire
Average of 4.1%.
GVA by industry sector
GVA can be broken down by broad industry sector. Table 1.1 below shows GVA by broad
industry sector for Blackburn with Darwen.
Part of the explanation for the variation, in local GVA, lies in the marked differences in the
industrial structure of the districts. Factors such as the changing competitiveness of
different sectors may affect industries, as may short-term issues such as changes in oil or
agricultural prices.
Table1.1 : Share of Gross Value Added In Blackburn with Darwen by sector
% change
1995
2008
1995-2008
Agriculture, forestry and fishing
0.3%
0.2%
0.0%
Production
44.8%
24.7%
-15.6%
Construction
4.8%
5.0%
58.6%
Distribution, transport and communication
17.9%
21.3%
81.5%
Business services and finance
11.8%
18.1%
133.3%
Public administration, education, health
and other services
20.4%
30.6%
129.9%
All sectors
52.8%
Source: Local GVA, 2008
In 1995 44.8% of Blackburn with Darwen’s wealth was generated by the production sector.
Conversely, 18% of the area’s wealth came from distribution, transport and
communication and 11.8% from business services and finance. Public administration
generated 20%. Overall in 1995, Production dominated the economy, with the service
sector some way behind. This however changes markedly by 2008.
The graph below shows GVA by sector for 1995 and 2008, production’s contribution to
GVA has declined while that for public administration, education and health, distribution,
transport & communication and business services and finance all show an increasing
contribution.
50.0%
45.0%
Production, 44.8%
40.0%
35.0%
30.6%
30.0%
25.0%
Public admin,
education, health &
other services, 20.4%
21.3%
20.0%
Distribution, transport &
15.0%
10.0%
5.0%
0.0%
24.7%
18.1%
communication, 17.9%
Business serv ices and
finance, 11.8%
Construction, 4.8%
Agriculture, forestry and
fishing, 0.3%
1995
5.0%
0.2%
2008
The graph below shows in more detail the contribution to GVA by public administration,
education and health and the production sector in Blackburn with Darwen. It shows that
in 1995 production accounted for or contributed 44.8% to GVA, since then its share or
contribution as a proportion of total GVA has steadily declined, such that in 2008 it
accounted for 24.7% of total GVA, a decrease of 15.6% on 1995 levels. The proportion of
GVA accounted for or contributed by public administration, education and health has in
the same period grown from 20% of total GVA in 1995 to 31% in 2008.
Figure 1.2 Production and Public sector GVA as proportion of total GVA by year
Production (1)
50.0%
Public administration, education, health and other services (2)
GVA Gap (1)-(2)
45.0%
44.8%
43.5%
40.0%
42.1%
40.4%
38.5%
35.0%
36.6%
34.7%
32.6%
30.0%
30.4%
28.7%
25.0%
27.6% 26.8%
25.8%
24.7%
20.0%
15.0%
10.0%
5.0%
20.4% 21.0% 21.6% 22.0% 22.7% 23.7% 24.6% 25.9% 27.2% 28.3% 29.5% 29.8% 29.9% 30.6%
0.0%
1995

1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
In 2004 production’s contribution to GVA was 28.7% compared to 28.3% for public
administration, education and health. By 2005, production’s share had fallen to
27.6% while public administration, education and health’s share increased to 29.5%.
In general, before 2004 production’s contribution to GVA was higher than that for
public administration, education and health, after 2004 this changed with the
contribution to GVA being higher for public administration, education and health
than production.
Productivity and GVA per head
Productivity is defined as the ratio between outputs and inputs in an economy. GVA per
head is the most frequently used measure of productivity, it measures the value of goods
and services that a local area produces as a proportion of the number of residents who
live there.
Table 1.2 shows that GVA per head is lowest for Blackburn with Darwen (£15,824/per
head) and is lower than the regional and national average.
Table 1.2: Gross Value Added per head in Blackburn with Darwen
GVA per
% change
Average annual GVA per
head (£)
1995-2008
head growth rate 1995-2008
Blackburn with Darwen
15,824
43.4%
3.5%
Lancashire County
16,675
50.5%
4.2%
Council*
Lancashire
16,170
48.1%
4.0%
North West
17,604
51.6%
4.3%
United Kingdom
21,103
57.8%
4.7%
Source: Local GVA, 2008
Average growth rates for GVA per head is lowest for Blackburn with Darwen compared to
local, regional and national levels. Since 1995 Blackburn with Darwen GVA per head has
increased 43.4% from £11.034 in 1995 to £15,824 in 2008.
Fig 1.3 GVA per head growth rate
6.0%
UNITED KINGDOM
6.0%
Lancashire
North West
Blackburn with Darwen
5.0%
5.0%
4.0%
4.0%
3.0%
3.0%
2.0%
2.0%
1.0%
1.0%
0.0%
1 998
Blackpool
0.0%
1 999
2 000
2 001
2 002
2 003
2 004
2 005
2 006
2 007
2 008
1 998
1 999
2 000
2 001
2 002
2 003
2 004
2 005
2 006
2 007
2 008
Figure 1.3 shows GVA per head growth rates (year on year), from 1996 to 2008, GVA per
head growth rates in Blackburn with Darwen lagged behind those of Blackpool,
Lancashire and Lancashire County Council 12 district rates. However, since this date
average growth rates per head have varied but have been higher than Blackpool but still
lag behind those of Lancashire. More recent data, 2007 and 2008 shows that the growth
rate in GVA per head was higher in Blackburn with Darwen than any regional or national
rates. The average growth rate of 3.5% for Blackburn with Darwen for the last 10 years
however is lower than the national (4.7%) and regional average (4.3%).
Further information
This briefing was prepared by: Saeed Patel
Research and Intelligence Officer
Corporate Research Joint Intelligence
3rd Floor Old Town Hall
saeed.patel@blackburn.gov.uk
01254 58(5106)